Digital Transformation is NOT about technology

Digital Transformation is NOT about technology or the product that you buy or the software that you install. It is about changing the way you think about your business.

It is about reinvention. It is a corporate culture revolution. It is about the art of the possible. This is our Star Trek moment – “To boldly go …”  Innovation does not need to be something that somebody else does. You don’t need to be some large tech company to innovate. It begins with the deep-seated belief that there must be a better way. Then, it requires action, you must start. Innovation starts with purpose. If your purpose is to make money, then stop. Your innovation will never be believable, and your focus will always be on adoption and not solving the problem. Innovation requires leadership. It requires active and trusted collaboration between a change agent and the person who experiences the problem. It requires the absence of the fear of the unknown. It requires you to embrace the art of the possible.

This is THAT opportunity for Business and IT to truly partner in taking the organisation forward. Each have a crucial role to play.

It does however seem that the industry is hell bent on pushing technology as a Digital Transformation strategy. The more time I spend with senior executives, the more I reach the conclusion that the 4IR will never reach its full potential if we continue to allow technology to drive the strategy. It too often happens that an Enterprise Resource Planning (ERP) or Digital Transformation project is delivered at great expense and effort, only for the improvements in the business to be nominal or even non-existent at go-live.  There are just too many system configuration driven projects out there where software selection and software implementation are deemed more important than serving the business purpose.

Digital transformation is THE opportunity for organisations to truly understand the patterns that drive their business and to use this information for reinvention and enhanced competitiveness and customer centricity.

Most organisations need a viable alternative to their current expensive, yet ineffective ERP solutions, in addition traditional robotic process automation (RPA) has not delivered on its promises. The opportunity presented by Fourth Industrial Revolution (4IR) thinking, technologies and concepts, is to challenge the paradigm of traditional business processes and the need for human-designed roles in how businesses are managed. Your Digital Transformation journey provides a platform for the re-invention of your business. If that is not your purpose, then you are missing a golden opportunity to tear yourself away from legacy thinking and technologies. Of all the enterprise software driven projects that I have participated in over the past 30 years, Digital Transformation and the Fourth Industrial Revolution has by far the highest risk of not adding value it you persist in following a technology driven strategy. How often has your purchasing decision for a vehicle been based on features that you used once in the first week and never again in 5 years?

The role of ERP and of admin and compliance overhead in a business needs to be rightsized. Too much money, time and effort is expended on compliance and system related activities and too little on adding real value to your customer. The Fourth Industrial Revolution will provide real automation and business agility and will empower employees to focus on the delivery of high-quality service or product to customers. This is the business purpose, the reason the company exists, after all.

ERP and RPA currently in the market are constrained by human designed roles, are extremely complex to successfully implement and according to a recent Gartner article 75% of ERP projects fail to deliver value. Robotic Process Automation (RPA) projects are at risk of perpetuating the human design role constraint prevalent in ERP solutions. If RPA projects are approached incorrectly, they fall short of being true outcomes-based automation and the end up being no more than automated key stroke simulation.

One of the primary reasons for slow ROI on RPA projects is the absence of up-to-date, detailed, accurate and comprehensively modelled business processes and rules.  RPA is needed, it is conceptually valuable, digital transformation will not occur without it. But the industry is at risk of making the same mistakes as with ERP, by rushing headlong into technology driven projects.

Before embarking on RPA endeavours, companies should rigorously examine the need for human designed roles for all of the patterns that drive their business. It is imperative to re-engineer your business processes prior to automating them.

The traditional RPA approach is to get a “bot” to simulate a human employee on e.g. the ERP system. The correct approach is to conduct Business Process Re-engineering first and to identify those business patterns and activities that do not require a human designed role and process. Then you redesign those business patterns as automated outcomes-based activities. By redesigning business patterns as automated outcomes-based activities before pursuing Robotic Process Automation, you improve the effectiveness of your business, you release staff to focus on customer value added activities AND you reduce the compliance burden and overhead because you have less human designed roles and processes.. As an example, Segregation of Duties will not be needed in an automated environment.

The most important topic in project kick off meetings is the project purpose and how that serves the business purpose. Not half enough time is spent on aligning the project team and stakeholders behind the project vision. A second very important concept in innovative Digital Transformation projects is that everybody in the team has a voice. At some point, everybody thought the earth was flat. A few people thought differently. So, one person seeing it differently to the rest does not automatically make the one person wrong.  Listen to everybody to ensure that the outcome exceeds all expectations.

A rethink and indeed reinvention is required in how companies are audited. True automation and true automated auditing must be better than what we have now.

—Data Science—

Data is the new oil; it has been said. But data is only valuable if you have the correct data at the right time and of sufficient quality. A corporate culture of caring about data quality throughout the data value chain is probably the keystone to being prepared for the digital transformation journey. No amount of technology is going to fix bad data culture. Data science, machine learning and indeed everything in the new Fourth Industrial Revolution requires a much more granular view of data, compared to traditional ERP and CRM projects of old. The sheer granularity of the digital world means that any errors in data are magnified exponentially and they lead to vast deviations from the truth. Think of the effect of a two-degree error in direction if you are travelling 100 metres vs. 10 kilometres vs. 10,000 kilometres vs. 10 million kilometres. An important reason ERP, CRM and Digital Transformation projects fail before they get out of the starting blocks – lack of high-quality data. No ERP, CRM, Enterprise Software or Digital Transformation project can succeed without high quality data. There’s always a significant gap between the quality of the data you have and the quality you need for your ERP, CRM or Digital Transformation project to succeed. Beneath the surface of ERP and digital transformation, everything is data, and it needs to be refined before it can propel your business towards the Fourth Industrial Revolution. Data related questions for ERP and Digital Transformation: Why do we need the data, what is the purpose? Where will it come from? Do you have enough of it? Should it be enriched from external sources? The challenge with Data Science. During the project sales cycle, you need to position the art of the possible before knowing what your client’s data looks like. Then, when you start to look at the data, you need to explain to your client how much data wrangling work lies ahead without making the client or your team despondent. The promise of Data Science. In my 30 years of consulting in ERP and on various integrated enterprise software projects, I have never truly seen the business benefit as I do now with Data Science – if done correctly.

Data Science projects hold real business benefits even before the predictive insights are produced.

1. A thorough and well documented understanding of your data value chain and how it supports your business.
2. The opportunity to re-ignite a corporate culture of caring about data quality and the critical importance of data in the modern business.
3. A cleaned up and consolidated data asset base. This will serve you well for any future enterprise software projects. ERP, RPA, Data Warehouse, and of course, last but not least, your Data Science initiatives.
4. A clear, documented view of how your enterprise data should be enriched with sources outside of your organisation, to provide more meaningful predictive insights.
5. A clear understanding of the broader ecosystem within which your business operates. How you impact the ecosystem and how the ecosystem impacts your business.